Global Markets Tumble On Apple Bombshell, Currency Flash Crash

Thursday, January 3, 2019
By Paul Martin

by Tyler Durden
Thu, 01/03/2019

Global markets started the second trading day of 2019 the same way they did the first one: sharply lower, only instead of more economic gloom out of China, today’s bearish catalyst was only the second revenue warning out of Apple in nearly two decades which has sent AAPL stock tumbling 9% this morning, coupled with a subsequent flash crash in a variety of currency pairs, including the JPY, AUD and TRY, which sparked a selloff in risk assets in what has continued to be a painfully illiquid market, as investors scrambled for safety in safe havens such as bonds and gold even as concerns about slowing global and profit growth persisted while the US government shutdown entered its 13th day and no resolution was in sight.

While S&P futures were down 1.6%, Nasdaq futures led the drop for U.S. futures, dipping as much as 2.9% after Apple shocked investors by slashing its revenue guidance citing an “unforeseen” slowdown in China – which Tim Cook somehow discovered only after the quarter ended – and fewer upgrades to its flagship mobile device.

Apple was down 9% in pre-market trading. Technology shares led the Stoxx Europe 600 Index lower while equities in Asia also declined. Treasuries declined along with most European bonds.

“For the moment, investors have reacted by going into non-risky assets,” said Philippe Waechter, chief economist at Ostrum Asset Management, in Paris. “No one wants to take any risk because none of the uncertainties we are facing have been lifted, whether it’s Brexit, this trade war, or growth. Investors are putting their heads in the sand and waiting.”

“That Tim Cook and his company mentioned China as the reason behind the downturn in the company’s outlook seemed to hit exactly the pressure point traders and investors were already alarmed over,” Greg McKenna, markets strategist at McKenna Macro. “That is, the China and global slowdown which seems to have been confirmed by Wednesday’s global manufacturing PMI data.”

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